Govt relaxes norms for according Maharatna status

NEW DELHI: The government has relaxed norms for giving Maharatna status to public sector enterprises, a move that will benefit blue chip companies such as Coal India, GAIL, Bhel and NMDC in their expansion plans. Only four state-run companies --ONGC, SAIL, IOC and NTPC -- at present enjoy the Maharatna status , which gives them the financial and managerial autonomy to invest up to Rs 5,000 crore in a new venture without seeking government approval.

Under the new norms, a company qualifying for the Maharatna status should have an average annual turnover of Rs 20,000 crore during the last three years against Rs 25,000 crore prescribed earlier. Further, the criteria on average annual net worth has been relaxed to Rs 10,000 crore from the earlier limit of . 15,000 crore.

The net profit target has been halved, and a company which has posted annual net profits of Rs 2,500 crore for three years will stand eligible. The government is of view that relaxing the criteria for Maharatna status will further encourage other companies to meet the norms and thus post better performance.

"This will also help Indian PSUs to go for strategic for foreign acquisition of natural resources and technology. Domestically-, it will spur economic growth," said a senior official with ministry of heavy industries. Department of Public Enterprises, a nodal agency for all state-run companies said that this will suitably empower state-run enterprises, so that they can effectively face the challenges of competition, both domestic and foreign and further expand their operations. A Mahratna company can invest 15% of its networth in a single project for establishing a new venture or undertaking an acquisition activity with a cap of Rs 5,000 crore.

The overall ceiling in investments of all projects should not exceed 30% of the net worth of the PSU. Various public sector companies and their administrative ministries had asked the government to review the criteria for grant of maharatna status to PSUs. There are around 15 Navratna companies which can invest up to Rs 1,000 crore in a project.

These companies would now be in a better position to strive for the maharatna status. The government is already working on a policy that will allow state run companies to decide on overseas acquisition of energy assets without seeking prior government approval.